Kazakhstan set to cut LPG exports to feed petrochemical production

By Alla Afanasyeva

MOSCOW, July 13 (Reuters) - Kazakhstan will export less liquefied petroleum gas (LPG) next year, freeing up supply for the local petrochemical industry, according to a national plan for developing the petrochemical sector, and the energy ministry.

Both Russia and Kazakhstan are working to increase output and exports of so called value added products, diversifying from their main commodities offerings.

Russian LPG exports have already declined as petrochemical giant Sibur consumes more of the fuel, which is used as feedstock for the petrochemical industry.

Kazakhstan will need additional volumes of LPG when it commissions Kazakhstan Petrochemical Industries' (KPI) polypropylene-producing plant in early 2022.

Chevron (CVX)-led Tengizchevroil (TCO) will feed the plant with propane, an LPG product, which it supplies to Turkey, Eastern Europe and Asia.

"The volumes of liquefied petroleum gas exports will decline in 2022 in line with the propane volumes which TCO supplies to the petrochemical complex," the Kazakh Energy Ministry said in emailed comments.

The plan for the development of the petrochemical sector shows that Kazakhstan's LPG requirements are likely to rise sharply next year to 717,400 tonnes from the 102,400 tonnes forecast this year, while total LPG production is seen broadly stable, at 3-3.2 million tonnes.

TCO declined to comment.

The company produced 1.482 million tonnes of LPG in 2020 and exported 1.351 million, according to the data from Refinitiv and traders.

According to Reuters calculations, if TCO supplies KPI with the full 550,000 tonnes per year of propane agreed under the plan, the company's LPG exports would fall by 40%.

(Reporting by Alla Afanasyeva; writing by Vladimir Soldatkin; Editing by Kirsten Donovan)

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